Q: How does Harrison Street approach investing?
Harrison Street is a traditional investment manager in the sense that we raise capital that we deploy by executing real estate strategies. What differentiates us is our demographic focus. Instead of the traditional commercial real estate sectors—office, retail, multi-family, industrial, or lodging—we look at areas with relatively inelastic demand tied to people moving through cycles in their life. Instead of multifamily, we invest in student housing. Instead of retail, we invest in self-storage. Instead of generic office, we invest in medical office and biotech.
Q: The baby boomers are moving into retirement. Does the demographic focus look for large cohorts moving into a certain phase of life or is it more of an assessment that there will always be people needing certain things at specific periods in their life?
Fundamentally, we look for sectors where there will always be demand even in downturns. College students will always need housing. Everyone needs healthcare. Seniors will always need housing that fits their particular needs.
That said, the baby boomers have had huge impacts on American society as they’ve entered different life stages. We expect that to continue. Harrison Street is one of the largest investors in private-pay senior living in the country. The silver tsunami of aging baby boomers is expected to be a big driver of demand for senior living, healthcare services, and the lifesaving technologies being developed in our life sciences buildings.
Q: What is the benefit of the demographic approach?
It has had less volatility than more traditional commercial real estate investment strategies during economic downturns. When the company started in 2005, these were niche asset classes that didn’t attract much institutional capital. But where most commercial real estate sectors got hit hard in the global financial crisis, our sectors showed less volatility. Add on COVID and the subsequent hyperinflation and the rising-rate environment and we’ve lived through multiple black-swan events. That demonstrated the resilience of our business model, and in the last decade, a lot more capital has come into these alternative sectors.
Q: What’s your role?
I’m a managing director in the asset management team, with broad responsibility over the healthcare and life sciences sectors.
In healthcare our focus is primarily on medical outpatient buildings. Our portfolio is around 220 assets, 15 million square feet, and $6 to $7 billion in gross asset value. On the life sciences side, we have about 41 assets, 5.6 million square feet built, and $5 to $6 billion in gross asset value.
Once we’ve closed on an investment, our team is responsible for executing the business plan and managing the asset through the whole life cycle of the investment, including monetization and disposition.
Q: What does that look like?
We use several approaches. We develop new properties. We acquire existing properties and add value through repositioning. We also buy and aggregate portfolios.
These niche asset classes are not typically large assets. Our average medical office deal size has been on the order of $25 million to $30 million. Putting together a portfolio that might be $200 million-plus is a lot of work. Harrison Street does that work for larger investors.
Q: Would you describe a couple of investments as case studies?
On the medical outpatient side, we recently acquired a building outside Houston that was leased long term to the University of Texas’s MD Anderson Cancer Center as a treatment facility. It’s the sort of investment we hold in our core strategy where return metrics are income and asset appreciation.
On the life sciences side, we just delivered 101 College Street in New Haven. That came out of a partnership with Winstanley Enterprises, a New England based-developer. They’ve done a lot of work in New Haven and with Yale, including building 100 College Street and redeveloping 300 George Street. Both are office/laboratory buildings where Yale is a major tenant along side private sector tenants interested in collaborating with the university.
I love the tangible nature of real estate. When we provide spaces where healthcare practices and biotech startups can thrive, that’s good for everyone—patients, tenants, landlords, our company, and our investors.
The 101 College Street project was a complicated development with high-quality lab space that required balancing a lot of different stakeholders. Winstanley did a masterful job. The core tenants are Yale; Alexion Pharmaceuticals; and BioLabs, an incubator for life-sciences startups.
It was a great investment opportunity for us because it aligns several of our strategies, including life sciences, locations around university campuses, and proximity to large health systems.
Q: How did you come to do this work?
I’ve always had an interest in urban development. How does all the stuff that makes a city—how do skyscrapers—get built? How does the urban environment fit together? What’s the business side that makes it possible?
I went to Yale SOM because the business and society focus meant I’d get both the skills I needed for a career in commercial real estate and the bigger context I was interested in. The resources I tapped at Yale SOM and the university as a whole have been invaluable.
In real estate, you have to wear a lot of hats. It’s one of the reasons I love this industry. When you’re making asset-level decisions, you need to be thinking about finance, marketing, the perspectives of all the different stakeholders. I definitely draw on my experience at Yale SOM every day.
Q: How did the specialty in healthcare and life sciences come about?
I didn’t seek the specialty. But when I took an opportunity to work for Ventas, a healthcare real estate investment trust, I realize I liked working in sectors that can have a higher impact on society.
That has carried through to Harrison Street. One of the most gratifying parts of my job is going to the properties and seeing the impact. We own buildings in Chicago where Harrison Street employees bring their families—where lots of people are bringing their loved ones—to get healthcare. Or talking with scientists working in our biotech buildings about their research—it’s exciting stuff that could have a huge impact.
I love the tangible nature of real estate. When we provide spaces where healthcare practices and biotech startups can thrive, that’s good for everyone—patients, tenants, landlords, our company, and our investors. You can actually see these properties doing important things for the neighborhood, the community, and sometimes even beyond.
Q: Is there anything that has surprised you about your job?
I didn’t realize how much I’d value the opportunity to lead a team. Finance is so numbers and results focused that I don’t think many investment managers spend a lot of time thinking about managing people. But I believe developing and retaining really sharp, high-performing folks makes us better at everything we do—identifying opportunities, evaluating risk, and executing on transactions. I’ve found working with this group of smart, hardworking people incredibly rewarding, and it makes coming to work every day fun and exciting.
“The Yale School of Management is the graduate business school of Yale University, a private research university in New Haven, Connecticut.”
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